A recent survey from CNBC has found that nearly 40 percent of high-net-wealth individuals with assets exceeding $1 million have not engaged in any form of estate planning.
Many lawyers and financial experts believe one of the top reasons for these high numbers is what they call “estate planning fatigue.” With all of the changes to federal estate tax laws over the past decade, many wealthy people have simply grown tired of constantly updating their wills and other estate planning documents.
Additionally, a higher federal estate tax exemption amount of $5.45 million — recently increased with inflation — has also left slightly fewer people thinking that estate planning is a necessity to avoid costly taxes. Estate taxes can be a problem for Massachusetts residents, which levies its own estate tax if a person leaves an estate worth more than $1 million.
More Than Just a Tax Issue
Consulting with an estate planning lawyer does much more than allow high-net-worth clients to prevent paying unnecessary estate taxes. Your attorney can help you engage in a comprehensive process that covers your valuable assets, outlines your wishes, provides for your beneficiaries, and offers detailed guidance on the types of end-of-life medical treatments you would like to receive.
Without an estate plan, loved ones are often left guessing as to what the deceased individual would have wanted. That’s never an ideal situation, especially for people who are already dealing with the emotional burdens of a family member’s passing. Also, this can be extremely problematic for high-net-worth individuals who leave behind millions of dollars of assets without a revocable living trust or will, causing unnecessary litigation and family disputes.
If you have minor children, you need a will to appoint someone who you trust and is willing to raise your kids as their guardian if you and your spouse both pass away. Additionally, you should set up a living trust for any assets you would like your children to inherit, and appoint a trustee to manage those assets until your kids reach a certain age to prevent them from squandering their inheritance.
Another important aspect of the estate planning process – particularly for high-net-worth individuals – is establishing a financial power of attorney, naming a person you trust to manage your assets if you are unable to do so due to incapacity or traveling outside the country. This individual will be able to pay your taxes and bills, borrow money, invest funds and manage various transactions on your behalf when necessary.
There is also the advance healthcare directive, often referred to as a “living will,” which provides clear guidance on which end-of-life medical treatments you would and would not like to receive in certain scenarios. You should leave detailed instructions on resuscitation orders, organ donation and a variety of other medical actions. The end-of-life drama of Casey Kasem shows the importance of properly planning for high-net-worth individuals.